In 2014, Cities Take the Lead

While we are seeing more attention to addressing the paucity of useful national entrepreneurship data globally, efforts to develop comparable city-level information have been less of a focus with only a handful of global city rankings. How are city leaders now moving beyond dated “cluster and technology park” thinking to appeal to entrepreneurs and investors?

As I reported often in 2013, entrepreneurship policy is getting much more attention on the national policymaking agendas of governments around the world. Nations have started to compete in a race to build healthy entrepreneurship ecosystems, demanding better data – such as the World Bank Doing Business Indicators, OECD-Eurostat Entrepreneurship Indicators and more – to fuel and measure their efforts. In contrast, comparable city-level data is even more scarce and global city rankings are few. Nonetheless, city leaders are seeking to have entrepreneurs and investors pin their cities on their map and they are doing so with efforts that make clusters and technology parks look more like obsolete civil engineering projects as opposed to efficient local entrepreneurship policy.

This is a welcome development in the startup world as well as society at large. As Greg Satell’s Forbes article on the potential of cities points out, by 2050, 70% of the world’s population will live in urban areas.

Moreover, national governments can only go so far in reducing large-scale problems, such as climate change. Focusing on the growing environmental problems, a recent Fast Company article points out that national governments are “too big, slow, and in many cases, don't even want to acknowledge a problem that's so politically inconvenient. Over the past half decade or so, it has become increasingly apparent that cities are leading the way” (see “The 10 Cities That Are Leading The Way In Urban Sustainability”). This contrast is visible in many places around the world. Take Buenos Aires, which released the city’s first Entrepreneurship Master Plan, using the global platform of Global Entrepreneurship Week last November. The move stands in stark contrast to the worrying policies of Argentina’s national government.

Other new cities are taking center stage as well. In 2012, three cities were among the finalists of the Wall Street Journal and Citi contest for the most innovative City of the Year: New York, Tel Aviv and Medellin, Colombia. Once crime-ridden Medellin was the surprising winner. The city’s burgeoning tech-entrepreneur scene was quietly evolving while the world’s attention was focused on Colombia’s drug-cartel problems. In fact, Medellin has coined the term “e-culture” to refer to its messy entrepreneurial force at the grassroots level.

This e-culture thrives on the so-called “random collisions” that happen in vibrant cities. These are collisions of talent and ideas that mix together then recombine and likely fail before reemerging and ultimately producing value. Today’s rising entrepreneurial cities seek those collisions of ideas through multiple common spaces like coffee shops and entrepreneur meet-ups, sometimes even forming entire entrepreneurial neighborhoods (think Kreuzberg in Berlin). In such places ideas meet talent and funding, hardware developers connect with software gurus, and so on, making innovative products and services possible (e.g. sustainable agribusiness on the rooftops of skyscrapers).

So how can policymakers positively influence a city’s start-up and scale-up ecosystem? The answer is: in many ways.

Tax breaks are only one of the many policy levers. In Berlin, for example, the city’s urban policies helped revive old buildings with entrepreneurs. Boston, Denver and Chicago are trying to retain startup tech talent with a bicycle infrastructure that will appeal to young tech-savvy people. Allegedly reacting to this competition, Seattle Mayor Mike McGinn promised protected bike lanes for its workers, reports Emily J. Brown on the 1776 blog, a Washington, DC, co-working space.

Tech-entrepreneurship policies are not the only path. Think of one of Seattle’s entrepreneurial rock stars. It all started with one Starbucks coffee shop, which now “brews innovation” across the nation and many cities across the world through its appealing spaces and flavors. Other cities are focusing on creative entrepreneurship to boost employment rates and innovation. A new Kauffman Foundation report offers fresh insights into the role of cultural entrepreneurs in metropolitan areas, offering seven strategies for mayors and city council members to tap into their local creative talent:

Know who your local artists are.

Encourage convening equipment-sharing artists' centers.

Develop sustainable artist studio and live/work buildings.

Provide entrepreneurial training tailored to artists and designers.

Build networking and marketing opportunities for artists.

Embed artists in city development strategies.

Partner with local arts and policy faculty for entrepreneurial research and training.

Inspired by all these experiences, city mayors are taking the plunge. Mayor Sergey Sobyanin of Moscow, for example, is bringing the 2014 edition of the Global Entrepreneurship Congress to his hometown this March, opening its doors for outsiders to have a first-hand look at how things are evolving there in terms of entrepreneurship. This is a bold move in light of the controversial media attention the country has been receiving around the world. It shows that the city is serious about a finding a long-term strategy to make Moscow an appealing place to start companies despite a national legal and political system that offers plenty of roadblocks, as a recent New York Times article pointed out.

Many local leaders have been smart to acknowledge that their governments are only one component of larger city startup ecosystems and, as such, are engaging stakeholders and hiring top private-sector talent to implement their policies and programs. Such is the case for the newly formed team at city hall in Buenos Aires that reached out to the Startup Nations Policy Network to connect with the best research and practices in promoting entrepreneurship from government.

“We want to make things right and that means to make informed decisions, to measure the impact of the public policies, to analyze such data, and to be able to learn and eventually correct the policies based on the results of the data collection and analysis”, Mariano Mayer, the City’s Director of Entrepreneurship told me.

As the above account reveals, cities need data to evaluate their efforts and support their promotion as productive hubs for entrepreneurs. The City of Chicago, for instance, boasted that in 2012, 367 startups launched in the city, corresponding to one new startup every 24 hours. This compares drastically to 2002, when only 11 digital startups were launched in the city. To build on this strengthening economic force, the City of Chicago has designed a technology plan that includes building a next-generation digital infrastructure, fostering tech education through “smart communities” and providing for civic innovation and tech sector growth.

As projects such as Startup Genome mine data from entrepreneurs, investors and community enablers in local startup communities across the globe, we are better able to evaluate their efforts. Startup Genome is one of a handful of free and open platforms for collecting, curating and analyzing data about the startups in cities. As a result, community builders, entrepreneurs, investors and researchers will all benefit from fresh and constantly updated community metrics.

Many of the mayors jumping into these startup communities will share experiences at the Global Entrepreneurship Congress in Moscow on March 17, 2014. This network of city policymakers will become increasingly important in a world where data is less static and policymakers have to react faster in removing roadblocks to stronger startup and scale-up dynamics.